Basics of credit: types of interest rates

For F-1, OPT, H-1B, O-1, L-1, or TN visa holders, getting a loan is often a big factor in building and sustaining financial stability within the United States. Loans are available for a number of different purposes, including establishing credit, going to school, or having a safety net for when money gets a little tight. While getting a loan is relatively easy through the right company, F-1, OPT, H-1B, O-1, L-1, and TN visa holders have some confusing options when it comes to the type of interest they pay on a loan they choose.

First, let’s take a look at the two different interest options: fixed and variable.

What is a Fixed Interest Loan

For F-1, OPT, H-1B, O-1, L-1, or TN visa holders, a fixed rate loan is a loan that carries the same interest rate throughout the entire length of the loan. This means that at the time you apply, your interest rate (or the cost of the loan) is set based on your credit, the interest rate market, and the length of time you select to repay your loan. For instance, if you apply for a loan while interest rates are low, you can secure a fairly low-cost loan that will not fluctuate over time. Because the interest rate is fixed, your payment also stays the same throughout the life of the loan.

Advantages to having a fixed interest rate loan include the following:

  • Loan payments are predictable and do not change over time, making it easy to budget
  • Total cost of the loan is known as the time it is received
  • Changes to broad interest rates do not affect the loan cost or payment

What is a Variable Interest Loan

Non-residents also have the option to get a variable interest rate loan. With this type of loan, you are given an initial interest rate based on your credit, the loan amount, and the length of repayment, just as you would with a fixed rate loan. However, your interest rate has the potential to change either up or down over the course of the loan as broad interest rates change. This means the total cost of your loan and your monthly payment will fluctuate over time as interest rate changes take place.

Having a variable interest rate loan may sound a little scary when compared to a fixed interest rate loan, but F-1, OPT, H-1B, O-1, L-1, or TN visa holders can benefit from having a variable interest rate because:

  • The initial interest rate set for a variable rate loan is often lower than a fixed rate loan
  • Changes to the interest rate market could mean your loan’s interest rate decreases over time
  • Payments can decrease as the interest rate shifts down

Considerations for Fixed and Variable Interest Rate Loans

As an F-1, OPT, H-1B, O-1, L-1, or TN visa holder, your overall financial situation should determine whether you select a fixed or variable interest rate loan. If you are more comfortable with having a set loan payment throughout the life of your loan, a fixed interest rate is your best option. However, if you are okay with subtle fluctuations on your loan’s interest rate and payment over time, a variable interest rate loan may be the better choice.

It is important to understand that variable rate loans can increase as interest rates rise, so if you are unsure if your income will rise or your ability to repay will get stronger over time, you should choose a fixed rate loan. During a low-interest rate environment, selecting a variable interest rate loan may be a smart choice if you know that you can pay off your balance before interest rates go up. Understanding both the benefits and disadvantages of each type of loan is the first step in making sure you set yourself up for financial success as an F-1, OPT, H-1B, O-1, L-1, or TN visa holder.

About Stilt:

Stilt provides loans to international students and working professionals in the U.S. (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at rates lower than any other lender. Stilt is committed to helping immigrants build a better financial future.

We take a holistic underwriting approach to determine your interest rates and make sure you get the lowest rate possible.

Learn more about us on Wikipedia or visit us at If you have any questions, send us an email at